You convinced an investor to fund your product or service. You built the prototype. You hired a stellar team that believes wholeheartedly in your idea. You can’t lose, right? I wish I could say that a great product or service is all a business needs to succeed, but, unfortunately, that’s not true in today’s marketplace.
The number of reasons small businesses fail is daunting, and includes everything from starting a business for the wrong reasons to forgetting to serve the needs of the market. So many startups get caught up in the idea of their products or services – and the value they believe they bring to the marketplace – that they make a cardinal error: They enter a market that simply doesn’t care. Luckily, there is no end to the available advice from business owners who have been in your place – and came out on top.
Research Your Market
Thomas Edison, cofounder of General Electric, stated, “The value of an idea lies in the using of it.” And that sums up everything you need to know about creating a successful small business. Your product or service might be incredible – groundbreaking, even – but if you don’t pay attention to the needs of your consumers, it will fall flat. If the consumers in your market don’t want what you’re offering, demand won’t just appear out of thin air. Research the demand for the good or service before investing in the idea.
So many businesses fail today because they don’t focus on customer needs. Today’s technologies give us ample opportunities to track consumer habits and hone in on what they’re looking for in a purchase. We have the ability to see exactly what consumers value. Yet most companies focus solely on creating value – not whether the consumer finds the product or service actually valuable. Your unique selling proposition, or value proposition, is what convinces consumers to purchase what you’re selling. Getting your value proposition wrong can be the kiss of death.
Face Competitors Head-On
To determine an accurate value proposition for your idea, you need to ask yourself what sets your product or service apart from others in the industry. Your clients want to know, “What’s in it for me?” You need to be able to answer with exactly what they want to hear.
Tell consumers how your product or service solves a problem, and how it does this better than the competition. Don’t assume you’re the only choice available. Plan for competition, even if it doesn’t exist yet. If you have a really good idea, and there’s a demand for it in the marketplace, competitors will show up. Understand that being prepared to face competitors doesn’t mean simply marking your prices as low as possible or being prepared to drop your prices at the first sign of competition. Instead, show consumers how your brand does the job better – then you don’t have to be afraid to set prices reflecting that value.
Look at what your competitors are doing. Instead of getting discouraged, believe that you can do it better. Find out where they’re succeeding and where they’re failing. (Believe me – no company is perfect.) Turn their failures into your successes, and offer consumers exactly what your competitors cannot.
The alternative is a company that falters and fails at the first sign of an alternative product or service in the marketplace. If you can’t convince someone that your offering fills their needs better than anything else out there, you don’t have much hope of sustaining your business.
Stay Vigilant in Your Industry
The barriers of entry into the market are shrinking, thanks in large part to technology. Starting a business is easier than ever, and new technologies, such as crowdfunding, combined with an increasingly mobile marketplace, provide innovative solutions to traditional small business challenges. It’s easier (and less expensive) than ever before to launch a website, build an online presence, and even bring new products to market.
Easy access, however, does not guarantee success; it’s actually quite the opposite. There’s a greater risk for entrepreneurs to enter the marketplace without due diligence or ample research simply because it’s so easy. At the same time, there is more competition than ever before in any given industry. Strong business fundamentals are key. You must be able to succeed regardless of product differentiation, to pinpoint the unique value proposition of your offering, and to convey that value proposition to consumers at the right time and using the right medium.
Be Prepared to Pivot
To continue to have a successful business, you must “pivot” and reinvent yourself according to consumer needs. Take Yahoo, for example. Yahoo is still one of the most visited sites in the country, but its numbers have steadily declined in recent years. Analysts attribute the company’s lagging numbers to its failure to change its platform to perform well on mobile. Yahoo applications aren’t popular for iPhone or Android users, so the brand takes a backseat to Google and Facebook.
Don’t let the hurdles of market competition or consumer adoption stop you. Once you build your great idea into a tangible product or service, your job isn’t over. Find out what your consumers’ needs are, and mold what you’re selling to fill this gap in the industry. Stay vigilant in your business goals, changing them to adapt to the ever-evolving needs of your target consumer. Track your efforts religiously, and don’t let your guard down for a moment. Just when you think you’re at the top of your industry, you could end up being the next Yahoo – or, worse, the next Myspace. —Dan Newman, Cofounder of V3*Broadsuite
Image by: Stuart Miles